The Supreme Court has confirmed how holiday pay should be calculated for those who work only part of the year and have no contractually set hours.
The Supreme Court judgement is likely to mean higher holiday pay payments for many in the education sector, with the possibility of claims for unlawful deductions from wages where incorrect calculations have been made in the past.
In the case of The Harper Trust v Brazel, the Supreme Court confirmed that holiday pay for part-year workers should be ascertained by calculating the average of the worker’s weekly earnings over the 52-week period prior to taking leave, but excluding any weeks that the worker did not actually perform any work (i.e. during the school holidays) which would, obviously, bring the average down.
The case was brought by part-time music teacher, Lesley Brazel, who worked term-time at a school on a permanent contract of employment but was paid only for hours worked. The hours varied from term to term, depending on the number of children taking music tuition. Under the terms of her contract, she was entitled to 5.6 weeks paid holiday per year – in line with the statutory entitlement – and was required to take that holiday out of term time. Her holiday pay was calculated by applying a percentage (12.07% - this being the percentage of holiday allowance a person is entitled to receive compared to their actual working time), to the pay that she received for the number of hours worked in the term prior to the holiday. This was in line with the ACAS guidance at the time.
But a Court of Appeal ruling, which has been upheld by the Supreme Court, said this was an incorrect method of calculation and that the Working Time Regulations require that where a worker does not have normal working hours, the method of calculating holiday pay is taken to be the worker's average weekly pay in the 52 weeks before the leave starts, excluding any weeks in which no remuneration was payable.
“Holiday pay continues to be a minefield. Many employers have used a percentage rate calculation of annual pay to work out holiday pay for part-year workers who do not have normal working hours, and while some may have adopted the averaging method following the Court of Appeal’s judgement, this further ruling by the Supreme Court may result in a flurry of historic claims“, according to our employment law expert, Paul Reader.
“A full review of holiday pay is a good idea, to be sure you are keeping up to date on this front. This will help get it right for the future while also identifying any retrospective issues which could be subject to a claim for earlier unlawful deductions.”
Employment Lawyer, Paul Reader, is on hand to advise on any issues relating to employment law for both employers and employees. Get in touch with Paul on 01892 526344 or email email@example.com.
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The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. The law may have changed since this article was published. Readers should not act on the basis of the information included and should take appropriate professional advice upon their own particular circumstances.